While one commentator feels a recent ruling from the U.S. Tax Court case is "good news," many taxpayers will not feel the same. (The commentator, by the way, also happens to be the lead attorney representing the whistleblowers in the case. These are whistleblowers accusing taxpayers of wrongdoing.)
The IRS has in the past limited collection proceeds to only taxes paid under Title 26. However, in this case, the tax court ruled that whistleblowers reporting to the IRS can receive awards when collection of taxes occurs under Title 26. This ruling also allows whistleblowers to receive awards when a taxpayer ends up having to pay criminal fines and civil forfeitures.
What this means for you as an individual or business owner is possible involvement as a defendant in a whistleblowing claim. This may provide an additional incentive for whistleblowers to bring accusations against an individual or business for alleged wrongdoing. Whistleblowers now may receive greater rewards for reporting on other taxpayers due to this new tax ruling.
The reader likely already understands the complexities of tax cases. Most taxpayers are not in a position to understand in any depth offshore reporting requirements, state and federal requirements, and the sorts of documentation required in offsetting tax debt. Also, IRS tax penalties are already significant. Due to the power the IRS holds, the agency can garnish wages, close businesses and seize a substantial amount of assets.
For this reason, having a strong legal defense is always a plus. Tax authorities should not be in the position of implementing any penalties against you without credible and relevant proof on their side. Be sure to address any questions regarding your tax case to a qualified tax attorney who has experience dealing with IRS issues.